Sunday, June 23, 2013

Hamilton, ON house prices suffering from substitution effect

Bidding wars, soaring house prices hit Hamilton real estate
The former librarians were shocked to discover that for about half the price, $295,000, they could get everything they’d hoped to find in Toronto — a cool condo close to a burgeoning arts scene, thriving cafes, up-and-coming restaurants, and bike paths that meander along a waterfront undergoing a rebirth.
There they discovered elegant, and sometimes unloved, brick Victorians, charming workers’ cottages and even Rosedale-like mansions. And they were all shockingly affordable — at least by Toronto’s sky-high standards.
Median price for residential was $342,000 last month according to the RAHB chart for May 2013
Median household income was $79300 using and applying the last 4 years average median increase to the latest data.
Resulting in a median multiple of 4.3x.

Not sustainable, but more interesting in the medium term is what will the fallout be. As Toronto wanes will Hamilton continue to be seen as a boom town and weather the national downturn better, or will a contraction hit harder due to the weaker base to fall back on. If it remains clear that the transport project will finish I expect more of the former.

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